Balanced Scorecard: Myth and Reality

2005 ◽  
Vol 30 (1) ◽  
pp. 51-66 ◽  
Author(s):  
I M Pandey
Keyword(s):  
Strategic Planning ◽  
Performance Measures ◽  
Balanced Scorecard ◽  
Success Factors ◽  
Business Processes ◽  
Planning Process ◽  
Tracking System ◽  
Successful Implementation ◽  
Strategic Planning Process ◽  
The Balanced Scorecard

The performance improvement process is a critical component of the strategic planning process. Call it by any name, the process is very vital, and it has always been practised by many companies worldwide for a long time. This process has been recently dubbed as the balanced scorecard. The balanced scorecard is a system of combining financial and non-financial measures of performance in one single scorecard. It includes performance measures for four perspectives: financial, customer, internal business processes, and learning and growth (innovation). It need not be restricted to four perspectives; more may be added. The social responsibility and environmental concerns are two possible candidates. The balanced scorecard focuses on the link between business processes and decisions and results. It is considered as a device to guide strategy formulation, implementation, and communication. It also helps in tracking the performance and providing quick feedback for control and evaluation. A number of companies in the USA and a few companies in India have implemented the balanced scorecard. The success of the balanced scorecard or a similar device will depend on the clear identification of non-financial and financial variables and their accurate and objective measurement and linking the performance to rewards and penalties. The proponents of the balanced scorecard claim that it aligns with strategy leading to better communication and motivation which causes better performance. This assumption could be the single most important reason for the popularity of the balanced scorecard. However, this may or may not be true in practice. This is an empirical question. There is a need to document the experiences of the balanced scorecard companies and establish the cause-effect relationship. There are several reasons for the use of the balanced scorecard by organizations: The balanced scorecard is a comprehensive tool to understand the target customers, their requirements, and the performance gaps. The balanced scorecard provides logic for focusing on creating intangible and intellectual capital which under the traditional financial performance systems was difficult to do. The balanced scorecard is able to articulate the strategy of growth with business excellence which requires greater focus on non-financial initiatives. The balanced scorecard enables employees to understand strategy and link strategic objectives to their day-to-day operations. The balanced scorecard facilitates performance review and feedback on a continuous basis. The balanced scorecard, we strongly believe, will be useful to an organization when it is a part of the strategic planning process. A successful implementation of the balanced scorecard has the following other prerequisites: Top management commitment and support Determining the critical success factors (CSFs) Translating CSFs into measurable objectives (metrics) Linking performance measures to rewards Installing a simple tracking system Creating and linking the balanced scorecards at all levels of the organization Setting up a sound organizational communication system to harness advantages of the balanced scorecard Linking strategic planning, balanced scorecard, and budgeting process for better allocation of resources.

scholarly journals Assessment of the applicability of the Balanced Scorecard concept in small and medium-sized enterprises

Skola biznisa ◽  
2020 ◽  
pp. 112-136
Author(s):  
Ivana Jolović ◽  
Nevena Jolović
Keyword(s):  
Balanced Scorecard ◽  
World Literature ◽  
Business Processes ◽  
Comparative Method ◽  
Relevant Literature ◽  
Efficient Solutions ◽  
Internal Communication ◽  
Performance Measurement System ◽  
Successful Implementation ◽  
The Balanced Scorecard

The modern management concept Balanced Scorecard (BSC), thanks to the efficient solutions it offers, draws increasing attention from the management across the globe. BSC is a performance measurement system which unites a traditional, financial perspective with the consumer, internal business processes, and learning and growth perspectives; and provides intelligibility of the company's vision and strategic goals, strengthening of the internal communication of employees, and more efficient realization of key business activities. The implementation of the BSC concept in large enterprises is a quite simple and efficient process, while the procedure of incorporating its postulates into the structure of small and medium-sized enterprises is extremely complex and uncertain. For that reason, the aim of this scientific research is the assessment of the applicability of the BSC in small and medium-sized enterprises, with a simultaneous overview of examples of successful and less successful implementation practices, and the most frequent reasons for non-implementation of the concept itself. The research is inspired by the observation that the world literature has, to a certain extent, neglected the analysis of the application of the BSC concept in small and medium-sized enterprises. The descriptive and comparative method, the technique of analysis and synthesis, as well as analysis of the content of relevant literature of reference, national and foreign authors were used for research purposes. The result of the research is the confirmed assumption that the implementation of the BSC concept in small and medium-sized enterprises is possible but at the same time quite complex and demanding due to the influence of different variables. Accordingly, the recommendations such as that the BSC model should be simplified and burdened with a smaller number of metrics in order to become more applicable in small and medium-sized enterprises were derived in the research.

The Balanced Scorecard: Judgmental Effects of Common and Unique Performance Measures

2000 ◽  
Vol 75 (3) ◽  
pp. 283-298 ◽  
Author(s):  
Marlys Gascho Lipe ◽  
Steven E. Salterio
Keyword(s):  
Performance Measures ◽  
Balanced Scorecard ◽  
Business Strategy ◽  
Business Processes ◽  
The Balanced Scorecard ◽  
Business Unit Performance ◽  
Balanced Scorecards ◽  
The Common ◽  
Unit Performance ◽  
Multiple Units

The balanced scorecard is a new tool that complements traditional measures of business unit performance. The scorecard contains a diverse set of performance measures, including financial performance, customer relations, internal business processes, and learning and growth. Advocates of the balanced scorecard suggest that each unit in the organization should develop and use its own scorecard, choosing measures that capture the unit's business strategy. Our study examines judgmental effects of the balanced scorecard—specifically, how balanced scorecards that include some measures common to multiple units and other measures that are unique to a particular unit affect superiors' evaluations of that unit's performance. Our test shows that only the common measures affect the superiors' evaluations. We discuss the implications of this result for research and practice.

scholarly journals Balanced scorecard for implementing united territorial communities’ social responsibility

2020 ◽  
Vol 18 (2) ◽  
pp. 128-139
Author(s):  
Nadia Pylypiv ◽  
Iryna Piatnychuk ◽  
Oleksandr Halachenko ◽  
Yuliia Maksymiv ◽  
Nazariy Popadynets
Keyword(s):  
Social Responsibility ◽  
Balanced Scorecard ◽  
Local Governments ◽  
Business Processes ◽  
Service Providers ◽  
Successful Implementation ◽  
The Balanced Scorecard ◽  
Use Of Resources ◽  
Strategic Goals ◽  
Decentralization Reform

Under decentralization, local governments gain more rights and opportunities to use various types of resources, thus, increasing their level of responsibility (including social responsibility) for the use of resources. The paper aims to reveal the consequences of decentralization reform for the indicators of united territorial communities (UTCs) budgeting that reflect their general socio-economic condition, as well as the nature of the latter one; to adapt the balanced scorecard (BSC) to the feature of UTCs’ functioning, and to develop the UTCs strategic map. The paper indicates that the system of balanced indicators is an analytical tool for ensuring the realization of the concept of social responsibility of the UТСs. The research resulted in the development of the balanced scorecard of indicators for UTCs. It includes the following blocks: internal business processes, funding, service providers, service consumers, and environment. The research contributed to the development of UTCs strategic map based on BSC adapted to the peculiarities of UTCs. The strategic map provides an opportunity to link strategic goals of UTCs with the developed BSC blocks and allows for a successful implementation of the concept of UTCs’ social responsibility in conditions of the need to achieve sustainable development.

scholarly journals STRATEGIC PLANNING OF SHOPPING CENTRE ACTIVITIES BASED ON KPI

2021 ◽  
Author(s):  
Inna Koblianska ◽  
Nataliia Stoyanets
Keyword(s):  
Strategic Planning ◽  
Performance Indicators ◽  
Success Factors ◽  
Business Processes ◽  
Planning Process ◽  
Key Performance Indicators ◽  
Operating Costs ◽  
Shopping Center ◽  
Complex Object ◽  
Efficiency Indicators

Trade is one of the most intensive growing industries in Ukraine. This necessitates the study and deepening of the methodological foundations of strategic management of enterprises in this industry using modern tools, in particular, key performance indicators. The purpose of this article is to characterize the main business processes and to develop key performance indicators that can form the basis for strategic planning of the shopping center. There is suggested that the overall efficiency of the mall depends on a set of success factors: space, administration, and marketing. In view of this, focusing only on marketing aspects is not sufficient, when determining the key performance indicators for the shopping center; other parameters of the mall’s activities need to be reflected in the strategic plan too (through the relevant goals and indicators): production and operational, administrative. There is proposed a system of Key Performance Indicators to measure the activity of the mall as a complex object: results, cost, functioning, and efficiency indicators. The group of indicators measuring results includes the following KPIs: revenue, profit, use of the area of the mall. Cost KPI group embraces operating and capital expenditures. The group of functioning indicators involves the following KPIs: the number of visitors for the period, the share of permanent leasers, the share of leasers who terminated the lease agreement for the last year, the share of visitors who positively assess mall’s services, and the share of vacant space. The group of efficiency indicators includes the following KPIs: operating costs per unit of area, operating costs per 1000 visitors, profit per unit of area, rental rate. The proposed integral KPIs for the mall as a complex can be transformed into a system of indicators at the level of individual business processes (production and operation, administration, marketing), certain departments, and positions. Use of these indicators allows both to improve the quality of the mall’s strategic planning process and to form an appropriate informational basis for further control.

scholarly journals Perencanaan Strategis Sistem Informasi pada PT. Indah Kiat Pulp & Paper Tbk

2014 ◽  
Vol 5 (2) ◽  
pp. 905
Author(s):  
Rainer Hannesto
Keyword(s):  
Information Technology ◽  
Information System ◽  
Strategic Planning ◽  
Performance Measurement ◽  
Balanced Scorecard ◽  
Business Processes ◽  
Business Growth ◽  
The Balanced Scorecard ◽  
Lack Of Information ◽  
Pulp Paper

Business growth nowadays is very rapid. Most organization in all industry depends on information technology to compete in industrial competition. Before make a decision to invest in information technology, better to make planning for alignment between information technology and strategy that can brings benefit to company. The lack of information System strategic planning can have an impact on the achievement of the vision and mission of the organization.This research was conducted based on the framework by Ward & Peppard. Researchers interviewed the management and doing direct observation to determine the current business processes. Researchers also get the data by distributing questionnaires to the employees of the organization as well as literature. The result of this study is the composition of an application portfolio that contains information system strategic planning needs, management and infrastructure also performance measurement targets indication based on the results of the analysis of the Balanced Scorecard.

Planning for Strategic Change? A Participative Planning Approach for Community Hospitals

1992 ◽  
Vol 5 (3) ◽  
pp. 31-37 ◽  
Author(s):  
Susan K. MacDonald ◽  
J. Edna Beange ◽  
Peter C. H. Blackford
Keyword(s):  
Strategic Planning ◽  
Success Factors ◽  
Planning Process ◽  
Strategic Change ◽  
Business Case ◽  
Strategic Planning Process ◽  
Critical Success ◽  
Professional Management ◽  
Planning Approach ◽  
Private Corporations

Strategic planning is becoming to hospitals what business case analysis is to private corporations. In fact, this type of planning is becoming essential for the professional management of Ontario hospitals. The participative strategic planning process at Toronto East General Hospital (TEGH) is an example of how a professionally structured and implemented strategic planning process can be successfully developed and implemented in a community hospital. In this article, the environmental factors driving planning are reviewed and the critical success factors for the development and implementation of a strategic plan are examined in the context of TEGH's experience.

scholarly journals BSC SOFTWARE TO EFFICIENCY AND PERFORMANCE

ZBORNIK MES ◽  
2017 ◽  
Vol 1 (3) ◽  
Author(s):  
Predrag Pravdić ◽  
Rada Kučinar Gačić
Keyword(s):  
Measurement System ◽  
Balanced Scorecard ◽  
Success Factors ◽  
Business Processes ◽  
Business Environment ◽  
Financial Measures ◽  
The Balanced Scorecard ◽  
Corporate Change ◽  
Loyal Customer ◽  
Lack Of Commitment

Management processes directed primarily to the user and thus improve the efficiency and effectiveness of operations in exceeding user demands and expectations. So that organizations realize the benefits on all levels, as compared with external partners and business environment, as well as internally within the organization. But in practice, systems for managing corporate change often point to the shortcomings and lack of commitment at the level of corporate governance in order to improve the efficiency of the process. Taking into account the problems they face at the same company, Balanced Scorecard - BSC stands out as especially suitable tool for the management of corporate change. BSC translates mission and strategy of the organization in the comprehensive set of measures that provide a framework for the implementation of the strategy. But many senior managers recognize that no single measurement can provide enough information about the critical areas of the business. Therefore, a balanced set of measurements is needed. Organizations today use decentralized business units that focus on intangible knowledge, capabilities, and relationships created by employees. Some organizations understand that strategy must become a continual and participative process. The change from centralized command, and financial measures that come from past actions can no longer measure the objectives that need to be addressed. We must measure the strategy and the best tool to do this is balanced scorecard. BSC makes it possible to establish a model in the profit organization, so that the strategic aspects of the observed set relevant objectives and include features that will be measured. BSC aims to improve business processes for a streamlined process can improve product quality to customer satisfaction. So satisfied and loyal customer is a guarantee of higher profits. The balanced scorecard combines an effective measurement system that helps solidify a company’s strategic objectives with a management system that can help drive change in key areas such as product, process, customer, and market development. The measures of the balanced scorecard helps focus a company’s strategic vision, encourages thinking about current and future success and helps provide a balance between external and internal measures. This paper presents BSC modeling of key success factors represented in strategy map of profit organization and how it affects the organization’s measurement system.

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